We’ve all done the math in our heads: our fee x 40 hours…if only! Most coaches I know who see 40 clients in a week are working as health coaches in a setting where they make minimal money per hour and are given high quotas to “turn” clients. It’s a myth that you can make a high hourly rate as a coach without the proper time to prepare, research and serve your population in a timely manner. As you start private practice, recognize you have finite time to do great work, pursue consultation, attend to the business of running a practice and oh, yes, pay rent.
Additionally, you may decide to take work for someone else (who takes a cut of your fee), accept credit cards, (ditto) or slide your fees. (double ditto).
So then, how to set your fees?
Step One: Try this formula: Average fee for your coaching niche, in your area with a “years in practice” multiplier. A quick search in 3 major metropolitan areas for executive coaching shows a range from $150.00 to $1200.00 for an hour. The lower end of the scale belongs to those coaches that may work for a employee assistance firm that offers introductory coaching in for example, business communication. The higher end of the scale belongs to those coaching consulting companies that have experienced professionals of varied backgrounds and expertise that work with different hierarchies in a business. These numbers are of course, arbitrary, and are often dependant on your comfort level and the next step.
Step Two: Spend some time examining your financial reality. That’s right; what do you feel is the appropriate amount of money you should charge per hour? What does your professional experience add to the value of the coaching process? How much money do you believe you should bring home monthly?
This is an active exercise! Very soon, a client will ask you what you charge. It is important that the fee you set, feels authentic and valuable to you.
Over the years, as a clinical supervisor in the counseling profession and as a business coach, I have had to unravel the resentment a clinician or coach is feeling when they are doing big work for a low fee. And yet, they set the fee! Without digging in deep, getting a sense of the market, their own professional experience and exploring their own financial reality, they have unwittingly, undervalued their service.
Step Three: And now that you are comfortable and confident in that number–slide it down! That’s right, figure out the least amount of money you would take for doing what you do best. And don’t go a dollar less. Let me explain.
A beginning practitioner feels comfortable charging $150.00 an hour and plans to work 10 hours a week while building the practice and working part-time in a human resource position that provides in-house coaching. $1500.00 will cover her expenses and supplement her salary. Now, at the beginning, she has actively acquired five full fee clients. She has mindfully and confidently researched her area and recognized her value and the market price. A sixth client calls with a request for a lower fee. Our practitioner has a decision to make. Remember, she has determined a $1500.00 need. Should she slide? Maybe. Time to determine the client’s financial reality. How do we do that? ASK. That’s right. Here’s your script:
“I understand you would like a lower fee, my fee is currently $150.00. In your financial picture, is that possible?”.
That gives the client the opportunity to take her own mindful look at her finances. If the answer is no, get creative. Remember, YOU set your fees. How about this?
“I am willing to slide my fee for four months to help you out. At that time, let’s re-evaluate where you are (tip: ALWAYS set it up to re-evaluate!). I’ll plan to charge my full rate then. Will you agree?”
Everyone wins, you have a sixth client with a promise of a full fee in four months. Don’t forget to determine how many coaching hours, in your busy and valuable schedule, are eligible for sliding. That way, when you accept a client, you do so with the knowledge that you have made a choice–it hasn’t happened TO you!
Step 4: Decide HOW you will receive payment. I believe value in coaching begins with the payment received before the first appointment. The client has taken their very first step in committing to change. They have signed an agreement with you and you have an appointment on the books.
Step 5: We live in a credit card nation. A quick survey of the coaches in my consultation groups tell me that up to 50% use a credit card for payment. We have had great success with Ivy Pay. It’s easy to set up and use with a smart phone. From your computer, you can manually enter in the card number, too. Either way, each credit card holds back a percentage of payment for the privilege of use.
Step 6: Collect payment in a timely manner or better yet before the session begins–as you engage the client for the very first time. Here’s your script:
“It was a pleasure speaking with you and I look forward to beginning our work. We have agreed to settle up by…check, (credit card, paypal) and I will expect payment before the first meeting. My Consent form is located on my website to review the terms of payment.”
Of course, in your Consent form, this is all spelled out. This script is a friendly reminder and a cue that the session has come to a close. By this time, you are probably standing or the phone call is ended, the client is rescheduled and you are ending your time together. Don’t forget to say thank you as you post your fee to your client spreadsheet or ledger. After all, you have determined for yourself and for them, a fair and equitable amount for your time and expertise. Own it.
Step 7: Re-evaluate annually what you charge. After all, with each year, you are gaining expertise, adding to your skill set and paying your ever-increasing expenses. As you thrive, you may be able to add one or two more sliding scale spots in your week. Or, you may get financially creative when a client loses a job or hits a rough patch. All of this is within your control and is part of your overall financial strategy. And never forget, that you are modeling self worth to your clients every time you collect your fees.